Norway Reiterates Commitment to F-35s
Back in 2006 Lockheed Martin and the F-35 Lightning II team were facing difficulties and controversies in Norway. Since then, there have been some successes. The next milestone MoU was signed on Jan 31/06, amidst industrial and missile deals designed to bring Norway on board – but even that signing came with express statements that the country was keeping its options open.
Norway had threatened to back out of its Tier 3 partnership in the JSF program, but a Kongsberg JSM/NSM missile deal helped, and a subsequent conditional composite structures deal shored up support. Norway’s JSF production MoU was signed on December 31/07. On June 17/11, Parliamentary opposition caved and endorsed an initial buy of 4 F-35As. Now, Norway is moving into the full procurement phase.
With Dassault’s Rafale’s removal from the competition and EADS’ Eurofighter’s withdrawal, the battle came down to the F-35A vs. an upgraded JAS-39NG derivative. WikiLeaks documents suggest that it was never a real competition, with the F-35A ordained from the start.
The official figure for the program is NOK 62.6 billion in adjusted 2013 currency value, which is around $10.7 billion as of April 2013. That figure has remained stable since 2008, despite Pentagon adjustments that have seen official F-35 prices rise by well over 30%.
The current plan is for 4 training & transition F-35As to arrive at Eglin AFB, FL in groups of 2: 2 in 2015 and 2 in 2016. A steady set of orders would then see F-35As arrive in Norway beginning in 2017, with Parliament approving and budgeting for the purchases annually, 6 at a time. This approach offers Norway more flexibility than the previous plan of a 42-plane order to begin arriving in 2018, with the last 6 aircraft as a separate and optional purchase. If costs become a problem, course correction is possible – but at that point, their only real option will be to reduce their fighter fleet size.
Most RNoAF F-35As will be based at Ørland Main Air Station in south-central Norway, near Trondheim. The airfield at Evenes in northern Norway, near Narvik, will host a small Forward Operating Base that will be upgraded to offer Quick Reaction Alert. It will hold about 10% of overall RNoAF F-35 flights.
Kongsberg’s stealthy Joint Strike Missile (JSM) is technically separate from Norway’s participation in the F-35 program, but the Norwegians aren’t treating it that way. It’s currently the only long-range strike weapon that’s slated for carriage inside the F-35A’s weapon bays, and Norway has high hopes for export success. To them, it’s a cornerstone of their industrial participation. The JSM is scheduled for full F-35 integration in Block 4. Block 3 is the final F-35 version that will emerge from development in 2018 – 2019, which means Block 4 would be ready around 2021 at the earliest.
Contracts & Key Events
October 16/17: Last Thursday, a modified Royal Norwegian Air Force F-35A Joint Strike Fighter touched down at Eielson Air Force Base, Alaska for the next phase of testing for the type’s drag chute. The aircraft was flown by the RNAF’s test pilot, Major “Taz” Amdal, who will now will help certify the Norwegian drag-chute and demonstrate that the entire fleet of F-35As are capable of landing at a runway condition reading (RCR) of 7. The RCR scale is based on how wet and dry each runway is, with a RCR 23 considered a dry runway while an RCR 5 is compared to landing on ice. Amdal’s F-35 is the first to touch down at Eielson AFB ahead of the base hosting two squadrons of USAF F-35As from 2020.
October 06/17: Norwegian defense firm Kongsberg expects to conduct the final flight test (FTM-5) of the Joint Strike Missile (JSM) in the spring. The Norwegian Defense Ministry said the test, the program’s sixth, will take place in March 2018, bringing to an end a two-year flight-test campaign to qualify the missile for integration on Norway’s planned fleet of F-35A Joint Strike Fighters. The final flight test will be the first end-to-end test for the missile, and will see a JSM equipped with a live warhead and launched from a legacy F-16C/D Fighting Falcon from the US Air Force’s 445th Flight Test Group against a ‘realistic’ land target at the Utah Test and Training Range in the United States.
November 4/16: An F-16 with the 416th Flight Test Squadron at Edwards Air Force Base, USA, is carrying out risk-mitigation testing of the Joint Strike Missile (JSM), a fifth-generation, long-range, precision-guided, stand-off missile system designed by Kongsberg Defence Systems and being developed for the Norwegian armed forces. While the weapon will be eventually integrated on Norwegian F-35s, testing on the F-16 will allow for easier integration on the next-generation stealth fighter. The JSM is designed to be carried in the F-35A’s internal weapons bay and is the only powered, anti-surface warfare missile to do so according to Norwegian officials.
October 15/15: As Norway eyes a defense budget hike for FY2016, the country’s defense establishment is looking to bolster funding for its future fleet of 52 F-35s. With procurement of the first 22 F-35As cleared by the Norwegian Parliament – covering deliveries to 2019 – the program is expected to see a doubling of its budget in 2016, with the country’s P-3 Orion ASW fleet also seeing a budget boost.
September 23/15: Meanwhile, Norwegian defense officials reiterated their commitment to the procurement of up to 52 F-35s, citing Russian power projection in Northern Europe as a reason to press ahead with the acquisition. The first F-35 deliveries to Norway are expected in 2017, with Initial Operating Capability expected two years later. The Norwegians opted to buy the F-35A in 2013, after the Lockheed Martin jet beat off competition from an upgraded version of Saab’s JAS-39NG Gripen. The first F-35 manufactured for the Norwegian Armed Forces was rolled out by Lockheed Martin on Tuesday.
April 26/13: Parliament. The Norwegian government submits a formal Parliamentary request to authorize 6 F-35As for delivery in 2017. That would place them within Lot 9 production, in US FY 2015. The NOK 12.9 billion ($2.18 billion) request includes the fighters, plus advance training for operators and maintainers, simulators, and integration work. That total could rise as high as NOK 15.9 billion ($2.71 billion), if the full “uncertainty allowance” is also spent.
These aircraft would be the 1st F-35s to fly in Norway; the RNoAF’s first 4 F-35As will be based at Eglin AFB, FL for training purposes. This year’s announcement also includes a shift in plans to 6 fighters submitted for approval each year, for arrival in Norway from 2017-2024.
In other news, Kongsberg’s stealthy JSM anti-ship and land strike missile now has a firm slot for integration: F-35 Block 4. Norwegian MoD.
March 12/13: Issues & allies. JSF PEO Air Force Lt. Gen. Christopher C. Bogdan, USAF, offers a number of important pieces of information at the Credit Suisse/McAleese defense programs conference in Washington, DC. One is that he hopes to have unit cost, including the engine, down to $90 million by 2020 – about 10% lower than current Pentagon estimates beyond 2017. Allies “need to know where their money is going”, especially since orders after LRIP-8 (2014) are expected to be about 50% allied buys. Unfortunately there’s an issue with IOT&E processes, which has been left unaddressed until the issue became a source of buying uncertainty:
“Adding insult to injury, the JSF program office classified all documents as “U.S. only,” which upset partner nations. Even if they are all buying the same aircraft, each country has its own air-worthiness qualification processes and other administrative procedures that require they have access to the aircraft’s technical data. JSF officials are working to re-classify the documentation, Bogdan said.”
Regarding Operations & Support costs, which are over 2/3 of a weapon system’s lifetime cost: “If we don’t start doing things today to bring down O&S now, there will be a point when the services will see this aircraft as unaffordable.”
Most of those costs trace back to design, so changes at this point are possible, but difficult. One design and support issue is that the 80% commonality between variants envisaged at the program’s outset is now closer to 25-30%. That means more expensive non-common parts due to lower production runs, larger inventories for support of multiple types in places like the USA and Italy, more custom work for future changes, etc. Information Dissemination | National Defense.
Feb 28/13: Block 8 long-lead. Lockheed Martin Aeronautics Co. in Fort Worth, TX receives a $333.8 million fixed-price-incentive (firm-target), advance acquisition contract, covering early equipment buys for 35 LRIP Lot 8 planes: 19 USAF F-35As ($155.2M/ 46%), 6 USMC F-35Bs ($85.4M/ 26%), and 4 USN F-35Cs ($27.5M/ 8%); plus 4 F-35B STOVLs for Britain ($45M/ 14%), and 2 F-35As for Norway ($20.7M/ 6%). All contract funds are committed immediately.
This would be Norway’s 2nd set of training aircraft. Work will be performed in Fort Worth, TX, and is expected to be complete in February 2014. This contract was not competitively procured pursuant to FAR 6.302-1 (N00019-13-C-0008).
2011 – 2012
Sept 27/12: Engine lead-in. United Technologies’ Pratt & Whitney Military Engines in East Hartford, CT receives an estimated $89.2 million for long-lead components, parts and materials associated with the 37 engines in LRIP Lot 7. The rest of the contract will follow, but initial purchases include $4 million from Norway (4.5%) for 2 F135 standard engines.
Work will be performed in East Hartford, CT (67%); Bristol, United Kingdom (16.5%); and Indianapolis, IN (16.5%), and is expected to be complete in September 2013. This contract was not competitively procured (N00019-12-C-0060).
June 20/12: Initial contract. Lockheed Martin Aeronautics Co. in Fort Worth, TX receives a $20.1 million advance acquisition contract to provide long lead-time parts, material and components required for Norway’s first 2 F-35As, to be ordered in the LRIP-7/ FY 2013 production lot.
Work will be performed in Fort Worth, TX (35%); El Segundo, CA (25%); Warton, United Kingdom (20%); Orlando, FL (10%); Nashua, NH (5%); and Baltimore, MD (5%). Work is expected to be complete in June 2013. This contract was not competitively procured pursuant to FAR 6.302-1 (N00019-12-C-0004).
June 15/12: First 2 authorized. Norway takes the next step, and formally authorizes the purchase of 2 F-35A fighters, which are intended for delivery in 2015. They will be based in the United States as part of a joint partner training center, which almost certainly means Eglin AFB, FL. The 2 aircraft authorized today are expected to be joined by a second pair in 2016. They are to be followed by up to 48 additional aircraft orders from 2017, which will be based at Orland AB and Evenes FOB in Norway. The overall cost of the F-35’s procurement phase is estimated at NOK 60 billion/ $FY12 10 billion.
This is not a contract yet, but one can be expected fairly soon. Meanwhile, American support for internal F-35 integration of the JSM strike missile allows Norway to begin preparing it for deployment. This is very good news for Lockheed Martin, which is working through a 2-month long extended strike by its machinists, and a harsh US GAO report concerning the F-35’s progress. Norwegian MoD | Business Insider | Fort Worth Star-Telegram | WFAA Dallas.
1st 2 approved
June 15/12: Lockheed Martin Aeronautics Co. in Fort Worth, TX receives a $489.5 million advance acquisition contract to provide long lead-time parts, material and components required for the delivery of 35 low rate initial production Lot VII F-35. The order involves 19 USAF F-35As, 3 F-35As for the government of Italy, 2 F-35As for the government of Turkey, 6 USMC F-35B STOVL(Short Take-Off Vertical Landing), 1 F-35B for Britain, and 4 F-35Cs for the US Navy.
This contract also funds long lead-time efforts required for the incorporation of a drag chute in Norway’s F-35As. Drag chutes are especially useful when landing in cold climates, where runways and tires may fail to provide the same level of traction.
Work will be performed in Fort Worth, TX (35%); El Segundo, CA (25%); Warton, United Kingdom (20%); Orlando, FL (10%); Nashua, NH (5%); and Baltimore, MD (5%); and is expected to be complete in June 2013. This contract was not competitively procured, pursuant to US FAR 6.302-1, by US Naval Air Systems Command in Patuxent River, MD (N00019-12-C-0004).
June 14/12: Norway’s Storting (parliament) approves a significant increase in defense spending, with the F-35 purchase playing a central role. The country will also be making investments in modernizing and adding CV90 tracked armored vehicles, and purchasing UAVs.
Overall, Norway will see a budget increase of 7% by 2016. Monies spent of the Afghan deployment will be continued and redirected, while “significant” supplementary funds will be added for the F-35 purchase. Source.
June 14/12: US GAO Report. Congress’ Government Accountability Office delivers a report on the F-35 program. Key excerpts from GAO-12-437: “Joint Strike Fighter – DOD Actions Needed to Further Enhance Restructuring and Address Affordability Risks” :
“The new program baseline projects total acquisition costs of $395.7 billion, an increase of $117.2 billion (42 percent) from the prior 2007 baseline. Full rate production is now planned for 2019, a delay of 6 years from the 2007 baseline. Unit costs per aircraft have doubled since start of development in 2001… Since 2002, the total quantity through 2017 has been reduced by three-fourths, from 1,591 to 365. Affordability is a key challenge… Overall performance in 2011 was mixed as the program achieved 6 of 11 important objectives… Late software releases and concurrent work on multiple software blocks have delayed testing and training. Development of critical mission systems providing core combat capabilities remains behind schedule and risky… Most of the instability in the program has been and continues to be the result of highly concurrent development, testing, and production activities. Cost overruns on the first four annual procurement contracts total more than $1 billion and aircraft deliveries are on average more than 1 year late. Program officials said the government’s share of the cost growth is $672 million; this adds about $11 million to the price of each of the 63 aircraft under those contract.”
March 23/12: Norway releases its new Defence Plan. Their goal is still 52 F-35As: 48 operational and 4 for training, but 6 planes can now be considered options. Basing will be at Orland in mid-Norway, with a secondary forward base at Evenes in the north.
The plan is to buy the 4 training aircraft in 2015, instead of 2016. That’s later than the originally-envisaged full buy of 48 from 2014-2018, but the F-35’s schedule has changed, too.
The rest of the buy would be stretched. Norway is considering 2017 as the start date for orders of the remaining 42, and the final procurement year could be as late as 2023-2024. That makes for an average buy of 5-6 planes per year, though Norway could also choose to buy fewer in early years and more in the later years, if that means lower prices. The final 6 operational aircraft would be a separate decision, after the main set of 4 training + 42 fighters had been ordered. That effectively turns them into a financial buffer, making them vulnerable to budget cuts or fighter cost increases. Norwegian MoD | Fort Worth Star-Telegram Sky Talk.
March 5/12: After a meeting of the existing F-35 partners at the Canadian embassy in Washington, Norwegian Defense State Secretary Roger Ingebrigsten says that Norway was finalizing its plans to buy “approximately 50 fighters.”
Even though Lockheed Martin has said that it expects F-35 prices to rise, Ingebrigsten said that does not expect any significant cost increases to its order. At the same time, he declined to provide details ahead of the Norwegian government’s mid-March submission to parliament. A hint may be provided by the fact that the government’s original plan had a range of NOK 52 – 72 billion (vid. June 6/11), so a NOK 20 billion hike could be claimed as meeting the original plan. Reuters.
Nov 24/11: $50 billion? Norwegian MP Roger Ingebrigtsen [Troms, Labour Party], and Rear Admiral Arne Røksund, head of their Department of Defence Policy and Long-Term Planning, visit Canada. They respond to Canadian MP Christine Moore [Abitibi–Temiscamingue, NDP], who asks about Norway’s planned budgets:
“Mr. Roger Ingebrigtsen: It’s about $10 billion U.S. That’s for 51 or 52 air fighters. That’s $10 billion today…
RAdm Arne Røksund: …The life cycle costs will be, I think, about–this is not public yet, so I have to be careful – $40 billion U.S. over 30 years. So that’s life cycle costs over 30 years, all included.
Ms. Christine Moore: …So the $10 billion is simply to purchase the aircraft themselves.
RAdm Arne Røksund: That is for the planes, initial logistics included, repair kits, and so on, for the first few years.”
The purchase figures are consistent with accounts of NOK 61 – 72 billion, but the 30-year sustainment costs are new. Ottawa Citizen Defence Watch.
June 17/11: Opposition caves. The initial buy of 4 F-35s has been approved in Norway, as opposition parties cave. The resolution gets unanimous approval. While a decision on the full F-35A buy isn’t expected until 2014, this vote effectively seals the buy.
In the aftermath, the governing coalition’s Socialist Left party is calling for a probe to be carried out by state auditor Riksrevisjonen. Former Labour Party defense minister Jorgen Kosmo will comply in his current job as State Auditor, if a Parliamentary majority requests it. Continued opposition divisions make that unlikely, however, as the Conservatives (Hoyre) say an audit into a decision process would violate parliamentary practice. If Labour and Hoyre vote against, a majority resolution is impossible. VNN | F-16.NET | Reuters | Stortinget Prop. S110 [Nynorsk, PDF].
June 6/11: Defense Minister Grete Faremo is called in to an open Parliamentary hearing about the F-35A. She maintains the NOK 1 billion ($180 million) cost increase figure, but the Aftenposten newspaper reports that actual cost estimates won’t be available until 6 months after the first 4 aircraft have been ordered. The government’s long-term plan, which will include fewer air bases, and F-35 lifetime cost estimates, isn’t due until well into 2012.
That “costs only after commitment” delay has drawn complaints from the opposition Conservative party (Hoyre), whose representatives complain that total cost estimates now vary from NOK 145 billion – 200 billion for the program. The government insists that the 1st 4 training jets must be ordered by the end of 2011 (Q1 of FY 2012 for the Pentagon), in order to arrive by 2016. On the other hand, the Conservatives, plus the Socialist Left, Progress, and Christian Democrats, would be a Parliamentary majority in Norway if they all voted together, and there is talk of voting against the initial 4-plane order.
What the Defense minister will say is this (translated from Norwegian):
“With the revised assumptions, the estimated cost of the acquisition of 56 aircraft now estimated at about [NOK] 52 billion [present value 2011 figure]. Without discounting the expected cost (P-50) for the entire combat aircraft purchase 61 billion 2011-NOK. Including uncertainty deposition (P-85)… 72 billion 2011-NOK.”
That’s a range of $9.7 – 13.43 billion, or about $173 – 240 million per plane. The entire program would, of course, include other costs beyond flyaway purchase. Norway’s Forsvarsdepartmentet statement [in Norwegian] | VNN.
April 18/11: VNN reports that the government’s Socialist Left party coalition partner (SV), and opposition parties the conservative Progress Party (Frp) and the Christian Democrats (Krf), have joined together to demand a detailed accounting of the F-35’s costs. The demands are connected to the government’s April 7/11 announcement of its intention to spend NOK 4.5 billion on 4 F-35As as a training and transition squadron, followed by 52 operational fighters.
A final decision from Parliament is due in May 2011, but the nature of that decision is contested within the government. That matters, because SV has 11 seats, and the margin between the governing coalition and all opposition parties is 86-83. The SV maintains that the Parliament has not granted final approval to actually buy the jets, and its Parliamentary leader Bard Vegar Solhjell says:
“I think it’s right that we stop and go carefully through the numbers… We need to debate whether we are where we should be, or someplace else.”
Labour Party State Secretary Roverg Ingebrigtsen has a different point of view, saying that:
“Norway has decided to buy the F35… That decision has been made.”
April 7/11: Norway’s current government, known as Stoltenberg’s Second Cabinet, makes a Parliamentary announcement of its intent to buy 4 F-35As as operational training aircraft, for delivery in 2016. That means a FY 2013-2014 order, in advance of the full 52-plane order a couple years later. The goal is to ensure that Norwegian pilots are prepared to use the operational F-35As when they begin arriving in 2018.
The government is also required to update their cost estimates, compared to the 2008/09 estimate in St.prp. nr. 36. The official estimate raises acquisition costs by NOK 1 billion (about $180 million now), which is only a 2.5% increase. The reason is cited as delayed US buys, which is true, but Pentagon estimates have also been raising the expected cost of the fighters, and that is not reflected here. Norwegian Forsvarsdepartementet [in Norwegian], and their updated cost structure [PDF, Nynorsk].
Jan 6/11: Norway’s government reacts to the news with reserved non-commitment, saying that it will seek more information, and adding that the program changes may change the timing of its F-35 purchase submission to the Stortinget (parliament). Norwegian Forsvarsdepartementet [in Norwegian].
Jan 6/11: F-35 program shifts. As part of a plan detailing $150 billion in service cuts and cost savings over the next 5 years, Defense Secretary Robert Gates states that he is placing the Marine Corps’ F-35B on the equivalent of a 2-year probation, extends the program’s development phase again to 2016, and cuts production of all models over the 2012-2016 time period, including 47 fewer F-35As. During the low-rate initial production phase, cuts in the number bought mean that the price for each plane doesn’t drop as quickly, making purchases more expensive. Pentagon release re: overall plan | Full Gates speech and Gates/Mullen Q&A transcript | F-35 briefing hand-out [PDF] || Aviation Week | Fort Worth Star-Telegram’s Sky Talk blog.
2009 – 2010
Dec 8/10: Industrial. The Labour Party’s Minister for Defense Grete Faremo addresses the US-Norway Defence Industry Conference. Among her remarks:
“Through the best value system, which entails strong international competition, Norwegian companies have already won contracts for about 350 million USD. This demonstrates that Norwegian companies have the skills, competence and production facilities to meet the very demanding standards of the aerospace industry.
Furthermore, the Ministry of Defence and Norwegian industry have put substantial effort into developing products to enhance the operational capabilities of the F-35: The Joint Strike Missile and 25mm ammunition (APEX), – products which should generate interest in the other F-35 partner nations, the United States included… We also eagerly anticipate the results of the US Analysis of Alternatives for future Offensive Anti Surface Warfare. I expect that this joint effort and the Analysis will pave the way for a successful integration of the JSM on the F-35.”
Dec 3/10: Sham competition? Wikileaks documents reveal that the Norway’s F-16 replacement competition was a sham, and that the USA used its weapons export laws as a way of hindering competition.
The contents of the leaked cables include a 2008 meeting between Sweden’s defense minister Sten Tolgfors and US ambassador Michael Wood, where Tolgfors asked for permission to buy an American-made Active Electronically Scanned Array (AESA) radar system for the Gripen. In response, US diplomatic cables included a recommendation that the USA use its weapons export laws. A July 8/06 cable reportedly reads:
“Given this potential impact of AESA releasability on the Norway competition, and possibly the Denmark competition… we suggest postponing the decision on AESA releasability for the Gripen until after Norway’s decision in December.”
Not content with that hindrance, the USA added political pressure on Norway to buy F-35s. Subsequent cables reportedly state that “other contacts, primarily in the MoD, have reassured us that the MoD will recommend the F-35.” Deputy Minister Espen Barth Eide (which other cables say is “regarded as the force which steers the defense ministry”, though “very senior US officials… characterized Barth Eide as ‘weasily’ “) is reported as telling USAF Europe commander Gen. Roger Brady to “trust the process, do not overplay your hand.” Before any decision was formally made, the cables describe success, with the caveat that “We must continue to act like an honorable and elegant competitor [even though the decision is already set].” Sweden’s Aftenposten [in Swedish] | Sweden’s The Local | Stockholm News | Swedish Wire | Aviation Week Ares | Flight International | Fort Worth Star-Telegram Sky Talk blog (incl. Cablegate URLs).
Sept 29/10: Delay. Norwegian defence minister Grete Faremo informs the Norwegian parliament that the F-35 buy will be delayed. Instead of receiving 48 fighters from 2016-2010, Norway will buy 4 training aircraft in 2016 instead of 2014, and the arrival of operational aircraft has been shifted to 2018 instead of 2016. The delay in fielding its new fighters may force the ministry to reconsider upgrading at least some of Norway’s F-16s, in order to cover the gap.
Norway has said it will stick with the F-35, citing $350 million in contracts to date, with a potential for up to $5 billion depending on the eventual number of F-35s produced worldwide. The RNoAF’s F-35 operating base is still scheduled to be picked in 2011. Defense News | Flight International | Fort Worth Star-Telegram | Key Publications.
2008 and Earlier
Dec 23/08: Aviation Week reports that the Norwegian government has taken the next formal step, and submitted a formal legislative bill to parliament. The document reportedly lists 2016-2020 as the dates for F-35A phase-in.
Dec 10/08: “Say what?!?” Saab’s CEO Ake Svensson holds a press conference and presentation that challenges the fairness and legitimacy of the Norwegian selection process. His objections are specific and detailed (Transcript | Presentation [PDF]). Excerpts:
“The claim that Gripen does not fulfil the operational requirements required by the Norwegian air force is important to understand. It also turns out to be founded on simulations previously unknown to us. To our understanding those simulations must be based on incomplete performance information, simply because such information about Gripen has neither been communicated to us nor requested from us or the Swedish government. The Norwegian evaluation committee has thereby not had access to the parameters required to reach the announced results.”
“…A key argument for Gripen is its extremely competitive life cycle cost… If the claimed estimates are correct it would be cheaper for Norway to obtain JSF, even if Sweden would have developed and given 48 Gripen Next Generation (NG) as a gift to Norway… It is Saab’s assessment that only 20% of the Norwegian evaluation committees cost estimates are based on the facts presented in the Swedish offer… The number of aircraft has been changed from 48 to 58 and the operational life cycle has been extended from 25 to 35 years. These are two new conditions entirely decisive for the calculation. That these calculations to a large extent have been conducted without dialogue is most unusual…
Saab’s own calculations of upgrade costs are based on 50 years of experience of developing and upgrading fighter aircraft… Norway has applied its experiences from the F-16 to these costs – a very different and in important aspects non-comparable aircraft. Upgrade costs according to the Norwegian calculation are several times higher than the costs Saab and Swedish authorities have calculated and provided. Our estimated value of fuel consumption is based on experience from 120,000 flight hours with Gripen… the evaluation committee chooses to raise the values we have provided, adding further additional costs. The cost for replacing aircraft is part of the estimation, with the assumption that almost half of the aircraft fleet will crash in 35 years. This is completely unfounded if applied to Gripen’s [operational] statistics. This also adds further billions to the calculation.
Further to this is a number of questions that the Norwegian evaluation group has chosen not to respond to, such as what specific currency rate was used, what price was used for calculating purchase of further aircraft, what other considerations in the calculation that had the procurement price as basis for the calculation and how much the weapon procurement was estimated to.”
“…We now move on and gather strength on markets where there is a real interest to evaluate Gripen based on our offers and a genuine and mutual interest to establish long-term industrial cooperation.”
Dec 6/08: Defense-Aerospace reports admissions from Norwegian government and industry officials that “Norway did not obtain a firm price from Lockheed Martin for the Joint Strike Fighter, and the price it was quoted will change substantially before the contract is signed in 2014”.
The report adds that reports of a $2.57 billion fly-away (i.e. no weapons or spares) cost for 48 aircraft are wrong because the NOK 18 billion figure must use January 2008 exchange rates rather than November 2008’s – raising the cost to about $3.27 billion. Maj. Jarle Ramskjaer of Norway’s Project Future Combat Aircraft Capability office explains the complex calculations:
“Conversion between NOK and USD is somewhat more complex than multiplying with the exchange rate. The net present value is then derivated as follows: First, we periodize expenses according to the payment plan and adjust for the escalation indices. Then we create a “currency future” based on the money marked interest rates in the two currencies, as advised by the Norwegian Ministry of Finance. Those “currency futures” are then used for each period, converting foreign currencies to NOK. Last, we discount with a factor to get real time yearly cost.”
Using the same January 2008 baseline, the NOK 145 billion life cycle cost of 48 F-35As over 30 years works out to $26.3 billion, rather than the reported $20.7 billion. Unless various forms of financial lock-in are used, these prices will obviously fluctuate as the respective currencies fluctuate. Defense-Aerospace adds that:
“Ramskjaer says, for example, that Norway did not receive, nor did it expect, a firm price at this stage, and that contractual prices, escalation clauses and penalty clauses for late delivery “will be addressed in the  contract.” “
Nov 21-30/08: Reactions. Reactions to the decision continue; the question is whether they will gather enough momentum to affect the final choice. Questions are being raised by the Norwegian and Swedish media, and by Saab, about the simulations used to evaluate the fighters, Norway’s procurement math – and, in an unusual development, ongoing veiled accusations of bad faith.
While the JAS-39 has a long flight history, the upgraded JAS-39NG does not, and neither does any version of the F-35. The Norwegian Defense Institute’s simulations must therefore rely on a wide set of assumptions. Those assumptions are being questioned, and NyTeknik notes the interesting presence of the Russian (and possibly Russo-Indian) Sukhoi PAK-FA next-generation fighter those simulations. PAK-FA is still in development, but if the project succeeds it would be fielded during the next fighter’s service life. After a post Cold War break, Russian military activities in and around Norway have risen sharply in recent years. Norway’s unease with Russia’s intentions appears to be returning.
Speaking of assumptions, a huge difference between Saab’s figures for through-life support, and the Norwegian government’s, is emerging as a live issue. Norway calculates the through-life cost of a 44-plane Gripen NG fleet as NOK 165 – 175 billion (about $23.5-25.0 billion), while Swedish calculations based on over 100,000 hours of flight experience with JAS-39 A-D versions give a NOK 55 billion figure (about 7.85 billion). A 300% plus difference is hard to explain. The fact that the discrepancy came to light at the end of the competition, and that no effort appears to have been made to resolve such a crucial figure, make it appear that the explanation may involve political engineering rather than aerospace engineering.
On which topic, earlier coverage has noted inflammatory statements by Norway’s defense minister. Aftenposten adds an unprompted mailing to the Croatian government from the Norwegian embassy, bearing the official press-release of Norway’s decision. Croatia is in the middle of a fighter choice of its own involving the JAS-39 Gripen, and Saab rightly considers this to be an “unneccessary and unfriendly” act. Posting Saab’s final offer on the government’s we site, a detail which is generally kept secret in order to avoid affecting other negotiations, has not helped either. Aftenposten adds that a member a Danish parliamentary defense committee has said that “this reduces Gripen’s chances to zero” in Denmark’s own competition.
All of this might be a tempest in a teapot, except for the international stakes involved – and the fact that Sweden and Norway recently embarked on an extensive defense cooperation plan, with elements that include both military and industrial integration. Aftenposten [Norsk] | Aftenposten re: defense cooperation [Norsk] | Aftenposten re: Danish fallout [Norsk] Dagbladet [Svenska] | NyTeknik [Svenska] | NyTeknik re: PAK-FA [in Swedish].
Nov 20/08: F-35A picked. Norway’s Ministry of Defence releases its decision in favor of the F-35A as Norway’s F-16 replacement, though Parliament still needs to approve the deal to buy up to 48 aircraft. At this point, the immediate cost is expected to be NOK 18 billion (about $2.54 billion – later revised to $3.27 billion based on currency exchange), and the total cost of the deal over a 30-year life span is expected to be about NOK 145 billion ($20.7 billion, later revised to $26.3 billion) for the fighter, weapons, maintenance, infrastructure and operations. Norway’s MoD:
“The JSF is the only candidate which fulfils all the operational requirements specified by the Norwegian Government and is furthermore offered at a lower price than the Gripen NG… Both candidates’ performance have been evaluated against a number of different scenarios. The scenarios used in this evaluation are the same as the ones used in the Long-term Defence Plan, says Minister of Defence Anne-Grete Strøm-Erichsen… The Joint Strike Fighter is considered to be the better of the two candidates regarding intelligence and surveillance, counter air, air interdict and anti-surface warfare, says [Minister of Defence Anne-Grete] Strom-Erichsen.”
Strom Erichsen ratcheted things up a step further when she told Norwegian news agency NTB that “The JSF is considered to be better than the Gripen in every major requirement for a combat aircraft.” StrategyPage claimed that:
“What changed Norwegian minds was a series of computer simulations by the Norwegian Defense Institute, which concluded that the Gripen could not provide much of a fight against the Russian advanced Su-30 fighters, or the new Russian fifth generation fighter.”
In a paper exercise, of course, assumption are everything and may not correspond to battlefield realities. At present, Norway’s Labor and the Center Parties are backing the decision to choose the U.S. fighter, while a 3rd coalition member (the anti-NATO Socialist Left party) wants more time to discuss the decision and said the party would make its decision in early December. Opposition parties also wish more time to study this conclusion. Since Norway does not expect to sign contracts for the F-35 jets until 2014, the delays create no urgency, though the MoD naturally wishes to begin negotiations with Lockheed Martin as soon as possible.
Across the border, Swedish Prime Minister Fredrik Reinfeldt called Norway’s decision “a setback” for Sweden, but stressed their right to make that decision. Saab’s CEO expressed disappointment, while pointing out that “Many [Swedish-Norwegian] industrial ventures we had planned were tied to selling Gripen, so if Gripen doesn’t happen, neither do they.” Behind the scenes, however, the reaction is stronger. Former Saab VP Jan Nygren had this to say in a Swedish newspaper article:
“We have tried to treat our Norwegian friends as serious and thorough… For which reason was it necessary to call a press-conference and then reveal that that the Gripen is lacking in a number of operational abilities? We are amazed that our neighbour Norway feels entitled to make these kind of claims of an aircraft that’s currently operative in our air-force… This will most likely mean that Saab will demand to have a look at the underlying assumptions. And I imagine that the government and the FMV are equally interested. For this is no small infringement, to use a blunt expression… Yesterday, we were all just dumbfounded. Today the mood’s more irritated, putting it lightly.”
As for the F-35 being cheaper, Nygren said that was “out of the question. Unless Norway’s fighter procurement is courtesy of the U.S taxpayer.” Norwegian MoD | Lockheed Martin | Associated Press | Bloomberg | The Guardian re: costs | Reuters, re: costs | StrategyPage | Dagens Nyheter [in Swedish, DID thanks translator Per Bjorkland] | The Local, Sweden | Reuters Blog op-ed.
Oct 16/08: Industrial. The Norwegian Defence and Security Industries Association (Forsvars og Sikkerhetsindustriens forening/ FSi) and 2 of Norway’s largest unions, the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge/ LO) and the Norwegian Society of Engineers and Technologists (Norges Ingenior og Teknologorganisasjon/ NITO) publish a report comparing the industrial benefits of the F-35 and the JAS-39NG for Norway.
Their conclusion favors Saab’s JAS-39NG Gripen. The short synopsis of their report is that the F-35 would be more attractive to a few select firms, but that Gripen offsets would have greater value to Norway as a whole, and spread industrial benefits into more regions. Industrial offsets are important to Norway, and the source of the report adds weight to its political implications. EuropeanDefence.co.uk report | FSi release [Norsk] | Full FSi/LOP/NITO report [PDF, Norsk].
April 28/08: Gripen International delivers its bid to the Norwegian government. Dagbladet reported, and Gripen’s release confirmed, that Norway added a new wrinkle – a guarantee that it would not be the only operator of this fighter type:
“An integral part of the Swedish offer to Norway, is a commitment on the part of the Swedish Government to operate the same advanced version of the Gripen fighter aircraft as offered to Norway, in the event that Norway selects Gripen as its future combat aircraft. This offer creates a win-win situation for both countries, as they would not only share the development costs for the new fighter but would also share future enhancements over the future operational life of Gripen fighter aircraft for the next 30-40 years.”
Read “Gripen Delivers Norwegian Bid – With a Twist” for more coverage and analysis.
Dec 21/07: No Eurofighter. EADS pulls its Eurofighter out of the Norwegian and Danish competitions, leaving both future fighter programs as a straight-up competition between the JAS-39 and the F-35. The rationales given are vague and make little sense, but many sources believe the key objection is official favoritism toward the F-35. The government-to-government nature of the F-35 deal, it seems, wouldn’t require the same industrial offsets, though the F-35 program has pledged significant production contracts with Denmark’s Terma and with Norwegian firms.
The Motley Fool, on the other hand, wonders if the same dollar devaluation that’s hammering EADS in the passenger jet market is also creating a price chasm for the Eurofighter. Which was already a significantly more expensive aircraft before dollar devaluation, at $100-120 million per aircraft vs. $50-70 million for its Gripen and Lightning II competitors. Bloomberg | Financial Times | Flight International | Motley Fool.
May 21/07: DID – Norway Renews Eurofighter Development Agreement.
May 2/07: DID – Norway Signs Development Agreement for JAS-39N Gripen
Feb 2/07: DID – Lockheed & Kongsberg Partner to Bring NSM to JSF
Jan 26/07: DID – Norway Signs on to JSF Production Phase, But Keeps Options Open
Jan 26/07: DID – Kongberg Wins F-35 Contracts – Maybe
Jan 12/07: Jas Gripen jubler over norske signaler. DN.no article headline translates as “Gripen jubilant over announcement of “Compensating Measures”
Additional Readings & Sources
F-35: The Joint Strike Fighter
- DID FOCUS Article – F-35 Joint Strike Fighter: Events & Contracts
- DID Spotlight – The F-35’s Air-to-Air Capability Controversy. A controversy in Australia goes global, and claims are being made for and against the F-35. What’s going on, what do we really know, and how is this issue likely to affect prospective customers?
US GAO (June 14/12, #GAO-12-437:) – Joint Strike Fighter – DOD Actions Needed to Further Enhance Restructuring and Address Affordability Risks
- “Odin,” the Norwegian Government Online – Conceptual Framework for the Fighter Purchase [MS Word format, Norwegian]
- Norwegian Ministry of Defence (Jan 26/07) – Industripakkane i sÃ¸kelyset. Includes presentations from the contenders. The Ministry now has an English translation of Espen Bareth Eide’s speech to this “Combat Aircraft Seminar.”
- Wikileaks (Dec 16/08) – cable 08OSLO670, LESSON LEARNED FROM NORWEGIAN DECISION TO BUY JSF.
- DID FOCUS Article – The JAS-39 Gripen: Sweden’s 4th Generation Wild Card
- DID – Eurofighter’s Future: Tranche 3, and Beyond
- Eurofighter official site
- DID – France’s Rafale Fighters: Au Courant In Time?
- Dagbladet (Nov 19/06) – Dropp amerikanske kampfly na [in Norwegian]. Second commentary by John Berg, defense analyst with Jane’s Defense. The title doesn’t need much translation.
- Dagbladet (Nov 2/06) – Bestemmer Stortinget eller Luftforsvaret norsk sikkerhetspolitikk? [in Norwegian]. First commentary by John Berg, defense analyst with Jane’s Defense. He believes Norway should pull out of the F-35 program, and explains why.
- Dagbladet (Nov 10/06) – Framtidas fly: Jacob Borresen Flaggkommandor og seniorradgiver ved Institutt for strategiske studier [in Norwegian]. Commentary by Jacob Borresen, former Commodore of the Norwegian Navy.
- DID (Aug 31/06) – Rafale Out for Norway
- DID (May 11/06) – Norway’s Future Fighter Competition: A Norwegian View . By Endre Lunde.
- Eurofighter GmbH (June 15/05) – Norway ups budget to increase Eurofighter industry funding (from EUR 23.2 million to EUR 35.7 million).
Other News & Developments
- Aftonbladet (Dec 3/10) – Här blir vi blåsta [in Swedish]. Relates in part to the Wikileaks cables.
- Flight International (Jan 1/07) – Forecasts 2007: Pressure will be on the F-35 project team to secure firm orders from its European partners
- Gripen International (Dec 22/06) – Gripen in the race for future fighter replacement in Norway
- Nordlys (Dec 12/06) – SAAB oppdaget nordomradene [in Norwegian]. Saab International visiting Tromso.
- Flight International (Dec 12/06) – Nordic Special: Buying Power. “Two of the Nordic states are weighing their options for new fighters, while all four are seeking to access strategic airlift. What’s on their shopping list?”
- Norway 24 (Dec 4/06) – Vil stoppe jagerflykampen: Norge skal bruke seks ganger mer pa utvikling av JSF-jagerflyene enn Eurofighter [in Norwegian]. Norwegian Progress Party expressing their wish to end participation in JSF.
- Roglands Avis (Nov 24/06) – SV-nei til jagerfly [in Norwegian]. Socialist Left announcing their opposition to the fighter purchase.
- DID (Oct 11/06) – Norway’s Proposed FY 2007 Defense Budget
Appendix A: The Play of Politics
The recent MoU has not discouraged Mr. Burbages’s competitors. The Saab/BAE partnership Gripen International has been especially diligent in its lobbying campaign, and may finally be seeing some results. On Nov 22/06, the members of parliament of the Socialist Left party, one of 3 parties in the Norwegian coalition government at the time, and outspoken critics of both the United States and NATO, proclaimed that they were opposed to any Norwegian fighter purchase. Instead, they wished to see the service life of the current F-16 fleet extended for another 10 years. As a secondary option, however, their spokesman explicitly said that they would prefer the procurement of the JAS-39 Gripen, due to the prospects of improved Swedish-Norwegian industrial relations.
Given the F-16s’ lifespans, a 10 year postponement seemed very unlikely, though by 2010, it was acknowledged that delays to the F-35 would end up keeping the F-16s in service to 2018 or later anyway. A joint “Conceptual Framework” for the fighter acquisition was accepted by the Norwegian government on Dec 14/06, and it included an option of postponement as a likely nod to the wishes of the Socialists. The report itself deprecated this option, however, on the grounds that it would lead to much higher overall costs than buying new aircraft now. Despite this defeat, the Socialist Left Party retained control of Norway’s powerful Ministry of Finance, and remained in a prime position to affect the final choice.
Lockheed Martin’s potential problems did not end there. Socialist Left Defense Spokesman Bjorn Jacobsen confirmed in a media comment that their opposition to further Norwegian participation in the JSF program is fueled by their dislike of Lockheed Martin itself. This makes it unlikely that any measures will win them over. More ominously for Lockheed, the traditionally US-friendly Progress Party stated in December 2006 that they wanted Norway out of the F-35 project, as Lockheed Martin had “not in any way” fulfilled the set requirements. In contrast, Gripen International has won political support by playing the Nordic, neutrality, and industrial cards, while the Eurofighter explicitly aligns itself with enthusiasm for the broader EU project.
This political hostility brings up the question of how the competition would be conducted. Following the decision to sign the most recent JSF memorandum, The Norwegian government has also announced “compensating” measures for the other 2 candidates, to offset Norwegian investments in the F-35 as a Tier 3 partner. Norway was formally a member of both the JSF and Eurofighter consortia, and decided in the end to offer financial support all around, which was a first for Saab’s JAS-39 Gripen in an international competition.
When Norway’s decision was released in November 2008, however, the Eurofighter consortium had already bowed out almost a year hence. They may have known something Saab did not. Sweden was surprised by the decision, and also by Norway’s derogatory comments about the Gripen’s performance and costs, comments that did not reflect the experience of other air forces flying the aircraft. With the November 2010 release of the Wikileaks cables, the USA’s maneuverings to secure the deal were laid bare – along with their clear belief that the competition’s results were determined long before the competition ended.
Appendix B: The Defense Debate: Strike-Fighter or Interceptor?
Another important factor in this recent face of debate has been public statements from several former high-ranking members of the armed forces. Their main arguments have not been connected to the politics or the money, but to if the F-35’s capabilities and their fit (or lack thereof) with Norway’s requirements. It is pointed out that the F-35 is primarily designed as a strike aircraft, with air defense and air-to-air combat as a secondary role. As such, its abilities to function as an interceptor and to operate within the air policing role have been questioned due to limitations in the F-35’s speed and agility when compared to its 2 competitors. Even its stealth advantage has been questioned, as several commentators say they expect it to be negated during the plane’s service lifetime by future developments in radars and sensors.
Range and over-water performance are also entering the capabilities debate. Recently, there has also been a renaissance of attention to the security challenges of its oil and fishing-rich Exclusive Economic Zone in the North Sea and Barents region. In November 2006 Norway even announced that it was considering a request to station fighters and Maritime Patrol aircraft in Iceland, following the closure of the US Naval Air base at Keflavik. Negotiations detailing this future cooperation are currently underway.
Apparently aware of the development, Saab International’s vice president Jan Nygren visited the Northern Norwegian town of Tromso in December 2006, and stressed then the potential of expanded investments from both SAAB and other Swedish businesses, particularly in the north, should Norway choose the Gripen. What he didn’t mention was the JAS-39’s short range, which would hamper its odds of selection if policing the air lanes from Norway to Iceland became a significant requirement. Reports that Saab is offering a version of the JAS-39 that carries more internal fuel, and can carry more external fuel tanks as well, may be able to mitigate this disadvantage.
All of these considerations are currently being aired in the Norwegian press by former high-ranking members of the armed forces, and by other defense experts.
A preference of the air policing role, increased pressure to focus on the northern seas, and an expanded area of operations over water would all bode ill for the F-35. Indeed, the latter 2 requirements would work to exclude any single-engined aircraft, given the need for high reliability and the potential for tragedy should an engine fail.
They would, however, be good news for the Eurofighter Typhoon. EADS’ presentation refers to US figures that showed the difference between single-engine F-16s and twin-engine F-15s who had “Class A” engie failure incidents. Both fighters had Class A engine problems as 38-39% of total Class A serious incidents. Every one of the F-16s to experience Class A engine failure was lost. Rate of aircraft loss for the F-15s in similar situations was 8%.
Eurofighter boasts by far the most engine power and agility range among the three competitors. Its main handicap is that it boasts the highest sticker price, and would very likely remain the most expensive option even if the F-35As were to experience a moderate-sized increase in price [DID: EADS later withdrew from the competition].
The Gripen’s new “next generation” JAS-39N version is a single engine fighter, which may be able to offset some of the existing Gripen model’s range issue. It has already garnered key political support, however, and is considered to be superior to the F-35 in speed, agility, likely sticker price – and possibly even in jobs.
Appendix C: 2006 Analysis – Could JSF Really Lose in Norway?
Despite all this, it would be highly surprising if Norway would decide to pull out of the JSF program now that the production MoU is signed. Although the Norwegian government stresses that no final decision will be made before 2008, there is little doubt that any Norwegian withdrawal after signing this latest MoU has significant potential to become a political scandal. Tom Burbage has previously stated that should Norway choose to withdraw, it could trigger demands of reparations from Lockheed Martin in the range of almost $1 billion. While this is an expected negotiating tactic, it’s a demand that would be backed by contract provisions that could not simply be ignored.
The effects a withdrawal could have on the JSF program as a whole are unknown, but they could be significant despite the small number of aircraft involved (approximately 48). With F-35 costs rising and still uncertain, and political opposition from an anti-American Left that is often an important political force in Europe, there is no desire to give a potential “domino effect” of withdrawals any breathing room. The seriousness of this scenario to Lockheed Martin is illustrated by the repeated visits by high level corporate officials such as Mr. Burbage to Oslo, as well the extensive industrial efforts made to secure continued Norwegian partnership. In this respect, Norway’s decision to sign the Production MoU is a significant victory for the F-35 program.
Fortunately for Lockheed, the anti-American coin has a flip side. One concern that has also been lurking in the background all along has been the possible effect of a withdrawal on the overall relationship between the US and Norway. The current Norwegian government withdrew all military support for the US presence in Iraq when it took office in 2005, which has affected the relationship between the two administrations ever since. The government has attempted to make amends by making Afghanistan their main foreign policy priority; but even there, they refuse to get involved in the more troubled areas in the south alongside The Netherlands, Britain, Canada, et. al. This is in sharp contrast to neighboring Denmark, which has long been involved in combat operations in both Iraq and Afghanistan. A Norwegian withdrawal from the F-35 program could add insult to injury, and bring the relationship to a new all time low. While some Norwegian parties do express an ingrained hostility to the United States, most treat the relationship as a serious foreign policy matter and will factor such things into their decision making.
Finally, the F-35 enjoys systemic preference, in that it reportedly has the support of the Air Force and the military bureaucracy, while the JAS-39 Gripen for instance enjoys predominantly political and some industrial support. The final choice will greatly depend on Gripen and Eurofighter’s ability to play and capitalize on their political attractions to key segments within the Norwegian parliament, and any lingering or ingrained resentment of Lockheed Martin. In Eurofighter’s case, their chances also rest on their ability to widen Norway’s defense debate in ways that suit their strengths in air-air combat and long-distance maritime overwatch.
If they fail to do so, however, and the military gets to forward their own preference, then barring a surprise development, Tom Burbage can be confident that the process will take its course – and the F-35 Lightning II will replace the F-16 as the Norwegian Air Force’s next fighter.